Allegations have arisen from H Partners Management, one of Harley-Davidson's biggest investors and the leader of its current boardroom infighting, that retiring CEO Jochen Zeitz and board directors Thomas Linebarger and Sara Levinson are holding "secret" meetings with select shareholders ahead of next week's annual shareholder meeting.
The meeting, the stage for its current power drama to come to a head, is meant to elect, or re-elect, the company's board and figure out who'll lead the company's search for its next CEO.
However, the new allegations made by H Partners Management include that to garner support for Harley-Davidson's current board picks, along with going ahead with the company's already stated plan in terms of finding a new CEO, Zeitz, Linebarger, and Levinson are meeting with shareholders in secret to bolster their position.
That, however, isn't unheard of, though in proxy fights like this, the SEC frowns upon it. What is far more interesting is the allegation H Partners Management states those executives are telling said shareholders, i.e. that the three executives "intend to exit the Board over the next year, the Board now intends to appoint an external CEO, and the Board has done away with the concept of the current CEO transitioning to Executive Chair."
If this is real, it'd be confusing as hell, as it basically gives H Partners Management the outcome they originally desired, and which caused their director to resign from Harley-Davidson's board. Something even H Partners Management asks in its allegations.
"We are skeptical that Mr. Zeitz, Mr. Linebarger, and Ms. Levinson will in fact step down from the Board in the next year, because we have heard these commitments before and they are never followed through on," states H Partners Management's release, adding, "However, even if Mr. Zeitz, Mr. Linebarger, and Ms. Levinson, are being truthful, and even if they plan to step down when a new CEO is found, then we are even more perplexed by several serious governance questions."
Those questions include;
- Why are Mr. Zeitz, Mr. Linebarger, and Ms. Levinson fighting with their shareholders and wasting millions of dollars of shareholders’ resources if they plan to leave the company anyway?
- Why would Mr. Zeitz, Mr. Linebarger, and Ms. Levinson selectively disclose non-public information to only certain shareholders?
- Why should shareholders allow Mr. Zeitz, Mr. Linebarger, and Ms. Levinson to select the next CEO, when shareholders have suffered $9 billion in equity value destruction over the course of the past two CEO succession processes they have overseen?
The second question interests me more than the other two, as it just doesn't make sense.
Zeitz's retirement announcement, i.e. him leaving at the end of the year after a new CEO was selected, made sense. You transition from one CEO to the next, allowing them to help the new person ease into the roll. The board doing its due-diligence in its search for a new CEO also makes sense. Even H Partners Management's resignation of its board seat after being told they couldn't pick the new CEO makes sense. That's just human nature.
But after weeks of proclamations of support for the board, Levinson and Linebarger, and its search for a new CEO, the idea that they three executives would just concede they'll all leave in order to keep their seats now during this next vote, well how does that make any sense?
Someone is playing someone here, and I'm not sure who it is. But as I said in earlier stories, next week's shareholder meeting is setting itself up to be a wild day, one with fireworks on both sides. And who will come out on top is anyone's guess.
So stay tuned, it's getting messier by the minute.
